General investors might have experience with traditional investment vehicles such as individual stocks and bonds, stock and bond mutual funds, ETFs, CDs, and REITs. Each of these options has a different set of benefits and drawbacks, but one of the things that almost all of them have in common is that the individual is competing with a large pool of other investors – most of whom have the same information that the individual investor has. The net result is diminished returns, and in some cases very high volatility which can mean high risk.
Other investors have chosen owning real estate as an alternative investment vehicle. After all, the competitive pool of investors is smaller and real estate has made many investors very wealthy. However, those who have chosen this route have probably experienced some of the many drawbacks of owning investment property. These include dealing with tenants, maintenance issues, and the many surprise expenses that seem to come out of nowhere.
At GCA Equity Partners, LLC, we believe that there’s a better way to invest. A way that avoids many of the downsides of traditional investments or owning rental property.
Our model is to act like a specialized bank. We make short-term loans on real estate purchased by investors who use that money to buy, renovate, and resell one to four unit residential properties. In return, they pay us interest on that money (typically at a 12% annualized rate), and allow us to share in the appreciation on the property when they resell.
We believe that this model works well for everyone. Vacant and often run-down properties get bought and dramatically improved, making neighborhoods nicer. These properties are often sold at the higher end of a neighborhood’s price range, improving values for the other homeowners in the area. Construction workers are kept employed and are able to take care of themselves and their families, re-injecting their earned incomes into the local economy. And we get a great investment option with good returns and our principal secured by equity in the real estate the loans are made against.
It might sound cliché – but we really believe that our model is a win for the neighborhoods we invest in, a win for the investors and construction workers improving the properties, and a win for us.